ANZ third quarter earnings jump 8 per cent to record high of $5.2 billion on back of Asian expansion

ANZ Bank has shrugged aside critics of its Asian expansion strategy with a strong lift in third-quarter earnings.

In a trading update to investors this morning, the bank said cash earnings for the nine-month period leapt 8 per cent to $5.2 billion - a new record - and that it maintained momentum for another record full-year result.

The bank warned its full-year result would be at the lower end of its previous forecasts.

Chief executive Mike Smith said Australian revenue was softer than had been hoped in some segments although robust earnings in Asia had compensated for this.

"Strong growth in Asia and in business linked to Asia continues to be a highlight," he said.

"Our unique regional capabilities also helped us regain the number one lead bank position in institutional banking in Australia and retain the number one lead banking position in New Zealand.

The bank also benefitted from a recovery in corporate-sector borrowing while a focus on improving productivity in its New Zealand operations helped drive earnings from the uptick in the Kiwi economy.

ANZ said trading conditions were showing signs of improvement coming into the final quarter after a period of extraordinarily low volatility.

While softer revenue had impacted on performance, a continued focus on cost reduction would deliver a full-year earnings result in line with a previous guidance of 4 to 5 per cent growth, although the bank warned this now could be expected at the lower end.

The bank said customer deposits rose 8.3 per cent while net loan advances rose 5.8 per cent reflecting a trend across all geographies of strong deposit growth and patchy lending.

Its net interest margin – a key determinant of profitability – dropped slightly in the third quarter as cheaper funding costs had been offset by greater competition in the lending market.

Mr Smith said corporate balance sheets across the region were strong and that this had helped lift the ANZ's credit quality.

He noted the flood of cash provided by central banks across the region and the US combined with weak business investment remained a drag on the bank's potential earnings growth.

ANZ shares opened weaker this morning, down 44 cents to $32.30 in early trading, as investors focused on the weaker growth forecasts.